One of the most important principles of Islam is that all things belong to Allah, and that wealth is therefore held by human beings in trust. Therefore, our possessions are purified by setting aside a proportion for those in need.

Zakat – also known as zakah – is one of the Five Pillars of Islam, and serves principally as the welfare contribution to poor and deprived individuals. The payment of zakat is obligatory for every sane and mature Muslim whenever there is an economic activity resulting in the net increase in their wealth.

Zakat not only purifies the property of the contributor but also purifies his heart from selfishness and greed. It also purifies the heart of the recipient from envy and jealousy, from hatred and uneasiness and it fosters instead goodwill and warm wishes for the contributors.

Paying zakat compulsory, and the Qur’an states that those who pay zakat are in the “brotherhood of faith”.

How is zakat distributed?

Zakat is distributed amongst eight categories of people. The Qur’an states that:

“Zakat is for the poor, and the needy and those who are employed to administer and collect it, and the new converts, and for those who are in bondage, and in debt and service of the cause of Allah, and for the wayfarers, a duty ordained by Allah, and Allah is the All-Knowing, the Wise.”

How to calculate zakat:

It is an obligation to pay 2.5 per cent of the wealth you have made after a full lunar year. Farmers who own their own land and harvest their own crops are required to pay 5 or 10 per cent of their harvest’s worth, depending on the type of irrigation.

Do I pay zakat on my house and car?

No, as long as you have one house. If you have a second house for investment purposes, this is “zakatable”. You should pay 2.5 per cent of the total saved from the house, excluding what is spent on maintenance or insurance. The same applies for cars. If you are renting a car to someone, this is considered a business entity, therefore also zakatable.

What about businesses?

It is advised that if a businessman earns a certain amount from his business, whatever he saves after taking care of his family’s needs and his business expenses, he pays zakat of 2.5 per cent. Secondly, a businessman has to pay zakat on the commodities in his store. This would require evaluating the purchasing power of the commodity and then paying 2.5 per cent of this amount.

The importance of zakat during Ramadan:

Most Muslims prefer to give their zakat in Ramadan because there are more rewards for doing so, but it is not necessary.

However, it is obligatory to pay Zakat Al Fitr, which is for fasting Muslims to give food or money on behalf of fasting people. The food or money is equal to one day’s meals for one person. The head of the family pays this amount on behalf of each person in the family.

If he is responsible for his parents, then he has to pay Zakat Al Fitr for them too.